One of the biggest talking points across India this year has undoubtedly been the Goods and Services Tax (GST), which came into force on July 1. Jigar Doshi – partner for indirect tax at SKP Business Consulting – discusses the benefits GST is predicted to bring, and the challenges of transitioning to the new system.
What do you foresee the overall impact of the Goods and Services Tax being on the Indian economy?
“The long awaited introduction of GST has been established with an objective of unifying multiple taxes, removing inter-state barriers and making India ‘one nation, one market, one tax,’ which would drive overall economic growth in the country.
“With the roll-out of the GST, faith has been rejuvenated that India’s fiscal deficits will reduce, and the overall impact of the tax on the India economy on a macro basis appears to be progressive and growth oriented.
“The consolidation of multiple levies leads to the elimination of a tax cascading effect, resulting in the reduction of prices in long run. Recently, India’s finance minister Arun Jaitley described the GST as a ‘winwin’ deal for all as it expands the tax net and brings down prices.
“The digitalisation of tax compliances and reporting also brings transparency and encourages the growth of industries in organised sectors.
“Uniformity of the taxation structure across the various states of India unifies the country in a single market. This helps to eliminate inter-state barriers, putting every state on a level playing field from an industry growth perspective.
“Thus, given the numerous benefits of this streamlined taxation structure, it is certain that the GST will augur well with the economy in the long term. However, given the mammoth changes instigated by the introduction of the GST, industries such as the SME and micro-SME sectors are facing huge implementation challenges. With this said, stability is expected to prevail over a period of time and thereafter companies will be able to leverage the incremental benefits of GST.”
How well received has the tax been?
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